Operation Car Wash: The scandal sending Brazil’s elite to jail

Few corruption scandals in modern history have shocked a country so thoroughly to it’s core as Operation Car Wash in Brazil. In a couple of years it has thrown Brazilian society into turmoil, contributing to a political and economic crisis. Netflix has even announced a new series based on the story to be directed by Jose Padilha, the man behind Narcos. But behind the drama of high profile arrests, damning revelations and almost unbelievable sums of stolen public money, lies a simple story of greed and abuse of power

The former head of the Chamber of Deputies, Eduardo Cunha, is arrested by federal officers

In March of this year, the former boss of South America’s leading construction firm, the Odebrecht Group, was sentenced to 19 years in prison by a Brazilian court. He was convicted on 51 charges of money laundering and bribery.

In October, Eduardo Cunha, one of Brazil’s most prominent politicians was arrested over allegations that he had taken bribes totalling more than £25 million. The former leader of Brazil’s lower house, the Chamber of Deputies, Cunha was a leading figure in the impeachment of the former Brazilian president, Dilma Rousseff.

Next up was Sergio Cabral, the Governor of Rio de Janeiro between 2007 and 2014, arrested by federal police on charges of leading a “criminal organisation” that accepted over £50 million worth of bribes. Prosecutors allege Cabral awarded major state construction permits on the basis of payment to himself and other officials within the City’s administration.

These are just three of the most prominent figures caught up in the biggest corruption scandal in Brazilian history. Many more politicians and business leaders have already been arrested, with prosecutors assuring the public that all those involved will be called to account. Over £2 billion in public funds has been recovered in two years, although prosecutors suggest the total sum involved is far greater. The whirlwind of arrests and prosecutions has unmasked an endemic culture of graft, abuse of public office and misappropriation of public funds around the Brazilian state oil company, Petrobras. The investigation has come to be known as Operacao Lava Jato, Portuguese for Operation Car Wash.

During a recent protest a man holds a sign supporting prosectors and calling for the removal of Renan Calheiros, President of the Senate and subject of the investigation

When the case first began there was little to suggest the titanic impact it would later have. In 2008 a Brazilian businessman, Hermes Magnus, contacted authorities over concerns that his company was being used in a money laundering scheme. Investigators identified a number of people connected to the scam but one name in particular, Alberto Youssef, stood out.

Alberto Youssef is a man with a long and storied relationship with the Brazilian legal system. Arrested multiple times in the 1980s for smuggling goods across the Paraguayan border, Youssef had eventually realised that his real talent lay in money laundering. During the early 2000s, Youssef became embroiled in a number of criminal investigations, including the cleaning of hundreds of millions of pounds at a state bank. But Youssef was already ready to cut a deal and name names in return for a reduced sentence. Thanks to his willingness to cooperate with authorities, Youseff was able to avoid lengthy prison sentences and, bizarrely, continue his involvement in money laundering.

The investigation into Youssef was what transformed the operation from a local matter into one that would shake the country. One of the businesses Youseff was using for his activities was a gas station and it was from this that the operation first became known as “Car Wash.” It was also through him that the first link to Petrobras was discovered. Surveillance showed that Youssef had purchased a Range Rover for a Paulo Roberto Costa, an executive at the majority state owned oil giant.

When Costa was arrested in 2013, he began to talk. Shortly after, so did Youssef. What he had to say stunned prosecutors, who realised they had stumbled across a major system of corruption involving one of Brazil’s biggest companies and the political establishment. David Segal’s excellent New York Times report on the issue reveals the moment this dawned upon those involved. “It was kind of like, in Brazil, we know that corruption is a monster. But we never really see the monster,” recalled prosecutor Tracy Reinaldet, “This was like seeing the monster.”

The main focus of Operation Car Wash is on the siphoning of Petrobras funds to political parties. Around 3% of all contracts awarded by Petrobras was in fact being secretly diverted to fund the parties comprising the ruling coalition. But the scheme was just one part of a system whereby state contracts were awarded on the basis of bribes. Prosecutors allege that Sergio Cabral, while governor of Rio, awarded a number of high profile construction contracts to companies in return for massive bribes. This included the contract for the renovation of the Maracana stadium before the 2014 World Cup. Eduardo Cunha, meanwhile, faces charges of hiding money obtained through bribes in Swiss bank accounts. According to the BBC, the total loss to Petrobras is estimated to be around £1.5 billion.

The revelations had the impact of a tidal wave on Brazilian society. The value of Petrobras, which had been at the centre of Brazil’s economic rise, plummeted through the floor. The parties that had made up the ruling coalition were all embroiled in the scandal and all found to have benefited from funds channelled out of Petrobras. Tens of thousands of people lost their jobs as the oil company foundered. The Workers Party, in power since 2002, saw it’s credibility devastated and it’s leading figures under investigation. It’s important to note the Dilma Rousseff, the recently impeached president, has not in fact been linked to any wrong doing, unlike many of the representatives that led the campaign for her removal.

Her predecessor however, Lula, has been identified as a target by the leading investigators of the operation, based in the southern city of Curitiba, though. Sergio Moro, the judge who has become the poster boy for Lava Jato, says there is sufficient evidence to put the former president on trial. Lula, however, has denied vehemently denied any involvement. Some of his allies suggest that the investigation is an attack on the Brazilian left, while rampant corruption on the right goes unpunished.

Sergio Moro, the controversial judge at the heart of the operation

But while he is a somewhat controversial figure, Moro has become a hero too many others in Brazil. Seen as a crusader against a rotten political establishment that has left the nation in economic ruin, Moro’s face can be seen displayed on posters and signs at the frequent political demonstrations being held in Brazilian cities. There is particular anger over the suggestion that a proposed anti-corruption bill will be watered down by politicians in an attempt to protect themselves from prosecution.

Moro has condemned changes to an anti-corruption bill, which he says have been made cynically to protect the guilty and intimidate his investigation. The powers of the bill have been reduced while another article, allowing judges and prosecutors to be tried for abuse of power, has been added. Some have accused Congress of trying to sneak through the changes while Brazil continues to mourn the Chapecoense tragedy.

Renan Calheiros has so far resisted calls for his resignation

Meanwhile, the investigation itself shows no sign of slowing down. The latest controversy is over the Senate leader, Renan Calheiros, another senior politician named by Car Wash prosecutors. Brazil’s Supreme Court has ruled that Calheiros must step down from his position after deciding last week that he must stand trial on charges of embezzlement. Calheiros has reacted with defiance though, saying he will challenge the decision. The news has sparked furious demonstrations in Brazil’s cities, who demand Calheiros’ removal and the end to any suggested impunity from prosecution for politicians. Military police estimated 15,000 turned out in Sao Paulo alone, many expressing support for Moro.

Two years after the investigation began, Operation Car Wash continues to rumble on. It appears certain that there will be more arrests and more revelations of political intrigue and outright greed. What remains to be seen is whether it will have a lasting effect on Brazilian politics. Those under the spotlight are already on the defensive, attempting to close ranks against Moro and his fellow prosecutors. Any hope that the upheaval would end with Rousseff’s removal has been proved naive. At the moment there does not appear to be an end in sight.